Takeaways from a 15,500% Ecommerce ROI with Andrew Faris
00:37 – Episode & Guest Overview
05:37 – Experience in QALO and Failures in Starting a Brand
07:35 – Learnings from the Opening Day Supply Company Failures
09:40 – Background About FC Goods
12:51 – How FC Goods’ First Product Made Them See Success on It
18:55 – Is The $140 Price in FC Goods’ Wallet a Sweet Spot
22:50 – Andrew’s Traffic Generating Strategies for FC Goods
32:54 – His Feedback in Using YouTube Ads
35:15 – Other Ways of Acquiring Sales for FC Goods
37:58 – FC Goods’ Turning Point in Terms of Growth and Scale
45:15 – Learnings from Other Brands
51:48 – Learn More About Andrew Faris
Episode & Guest Overview
So welcome back to another episode of Teach Traffic.
I am your host, Ilana Wechsler. And today we’ve got an interesting podcast, I’ve brought on a guest called Andrew Faris from 4×400. And 4×400, is I think you could call it an agency, Andrew, that really, you know, specializes, they’re uniquely different because they own and operate their own e-commerce brands.
And I recently read an article which Andrew I believe you wrote, detailing your experience and journey with acquiring a brand, growing it to a very large size, and then selling it and you really outline that journey that had me very intrigued.
And I thought, I’m going to bring you on today’s podcast, if you’re willing, and you weren’t kind enough to say yes, I thank you to really share your journey and break it down for our listeners.
And the key components I guess I’d really love to talk to you about today is obviously this is a success story. And everyone loves success stories and, and we all love breaking down and dissecting success stories, which we are going to do today.
But before we hit record as well, you’ve sort of touched on the fact that there have been some eCommerce brands that have completely flopped and failed. And maybe at the end of that show, we can also talk about your learnings of what has not worked in the past because I’m a big believer in not always just focusing on things that work.
And we can all learn from things at work. But it’s also a really good learning experience to think about things that don’t work.
And as we were saying, before we hit record as well that business owners like it’s just a constant journey of things not working, not constant. Hopefully the good…
It’s pretty constant, at least, at least for me. It doesn’t work. (laughs)
Some days it feels pretty constant. So yeah, thank you so much for taking time out of your day and agreeing to come on the show.
No, thanks for having me on.
Yeah, that’s awesome. Alrighty, so what we’re going to talk about is, as I said, your journey, excuse me, I’m acquiring this particular product, do you want to maybe tell us how you came across this product and what the product was?
Yeah, so um, maybe I’ll back up a little bit from there. So, I always try to explain the relationships between the companies here to people and it gets confusing. So try and track them to the best you can.
Common Thread Collective is an agency traditionally just kind of a traditional marketing agency, you specialize in paid social now is a full service, ad agency based originally in Southern California. Now in a COVID world, we’re fully remote like everybody else.
So a Common Thread Collective, CTC, at some point when I was there a couple of years ago, now, a few of us kind of looked around each other and said, like, you know, we’re spending all of this money other people’s dollars on you know, advertising and, and building sites and email and kind of doing stuff for all these clients, why don’t try to do it for ourselves, and see if we could win bigger on our own brands.
So a few of us. And really, this is kind of before I was super involved in this part of things. I was the head of strategy at CTC. And, a few of the partners kind of launched off for 4×400, and 4×400 is a separate entity from CTC but as a holding company for e-commerce brands.
So instead of just doing agency services we fully acquire and fully operate the brand sick majority stakes and then our mission is to help entrepreneurs achieve their dreams.
So our ideal structure is that we acquire brands and, and we don’t acquire 100% ownership, at least right now we’re thinking about all kinds of ways to make these relationships work better in the future.
But right now, the way we have operated is to help entrepreneurs by saying you bring your brand at a very, very small stage relatively speaking, like less than 500 grand in revenue. And actually really less than 300.
And so far, mostly about 100 in revenue when we get these brands and then we can try to supercharge them basically it surrounds you with a team that can operate the brand sometimes the founder stays and sometimes they don’t operate the brand and then try to grow to be something bigger than what you can imagine a lot of times it’s hired entrepreneurs, people who’ve been at it for, you know, it’s 10 years, they’ve kind of plateaued, they’ve built a real business which I have all the respect in the world for, even if you can’t quite get it to where you want it to.
It’s very hard. And, and yet, it’s not big enough, a lot of times for them to really pay themselves seriously. And especially, you know, people start when they’re 22. And then now they have a family and stuff and they can’t quite do that anymore. So for 4×400 does that so that’s kind of the basic idea CTC regular agency 4×400, a holding company.
I have a question about that. So it’s obviously a, you acquire a portion of a brand. That’s, you know, doing a certain amount in revenue, but probably enough revenue for proof of concept rather than they’ve got a product that people want to buy.
Experience in QALO and Failures in Starting a Brand
Well, that’s a good segue to what I was gonna say, which is that we actually started by thinking we’ll build our own brands. We had some experience with a number of us, particularly at QALO, Q-A-L-O, qalo.com, if you know, QALO in the US.
QALO was the first like, famous video guy wedding ring taking off and squeezing it the first big like silicone wedding ring brand there’s a few of those that have popped up since then, like Groove Life and Enzo Rings and some of that but QALO was the first big one.
And some of our people at CTC the founders etc his brother’s the founder of QALO and so we were all kind of interconnected in that journey. QALO was a crazy success story that went zero to 20 million in revenue in a year and a half with no funding. If you had it was insane.
So that’s where I like learned digital advertising was at QALO and it was Yes, it’s a roller coaster. It’s crazy. Right? So um, so we thought we’ll go build more brands like that one? Well, we’ll go to, um, and so at that time, launched a brand called “Opening Day Supply Company” and Opening Day was like sports-themed baby goods, as everything from onesies to bibs.
So whatever else. And it was a disaster, like we, we never even found the beginning of product-market fit really like, margins were terrible. We just did a million things wrong. And realize there’s much more starting at starting a brand than we were.
Even with our experience with QALO. We just think that was kind of an outlier success story and just realized, like we did a lot of things wrong.
No worries, that’s like part of the journey. Right? We made a lot of mistakes and paid a lot of money. But what we got in return for that money was a bunch of intellectual capital. We learned a ton in that process. And….
Learnings from the Opening Day Supply Company Failures
You want to expand on what you did learn?
Yeah, well, one of the first things we learned was that we shouldn’t start brands, what we one thing we realized is that like we just didn’t, it’s just not really what we spent most of our time doing.
It’s about the QALO journey, most of our time had been spent growing brands, we really were in on the CTC agency side of things, in brands that were in like, really, we really loved like the 1 million to $20 million part of the journey.
And, and even before a million in revenue when we first started, because when you know, when your new agency, you take all comers, anybody will pay you to do work, you, you just take their money and do whatever they asked you to. Because that’s how starting an agency works.
So, that got us involved with a lot of different agencies, or with a lot of different brands.
And what we realized like that’s where we’d really spent, that’s where our deepest sharpest expertise was that we actually needed to take some more time, probably not start from scratch so much on building out the operations and logistics and fulfillment and supply chain side of the business, even finance side of the business, instead, like we could sort of import some of that stuff.
So that changed that meant a huge shift for us.
And that was the biggest thing we learned was why don’t we instead say, let’s go get early stage brands that are not too expensive, frankly, to buy, because they’re just too small, often not profitable, really at all.
And, and why don’t we try to supercharge those brands ourselves.
And that was what led to the first couple of brands, including the one that you referenced, which is FC Goods. So that’s kind of the beginning of the journey. And that I think is helpful and then since then, we have acquired six more brands, one of which you referenced FC Goods, which I can talk more about, we sold.
And that’s the first exit we’ve had from any of our brands. We actually did have some success, grew it, and sold it. And in the midst of that, I would say we banked a bunch more intellectual capital.
I’ve learned a ton more in that process. I actually wasn’t even involved so much in the opening day, part things but then I came over and now I moved from the agency side until I run 4×400. So….
Background About FC Goods
Let’s unpack your journey with FC goods, which is obviously the article that I referenced and you really broke that down. As a starting point, though, did you find that product or did they approach you?
Yeah, so FC goods, FC stands for Fielder’s Choice. You’re in Australia, there’s not as much baseball play there. No is there here in the US? Yeah, well, there’s the Australian professional baseball league, which I would love to come to watch some time in person because I am a huge baseball fan.
So, you telling me it’s non-existent means I’m getting a sense of how much of a big deal it is over there. (laughs)
In my world at least (laughs)
No, of course, Microscopic yeah I know.
So yeah, anyway, not a ton of baseball play there. I know. But um, but, you know, baseball in the US is obviously not only a big sport, but it’s a really nostalgic sport.
It’s just filled with, you know, the American pastime kind of idea, right? filled with meaning and story and all this in ways that evoke deep emotion from people so, FC Goods was a brand that was founded as a hobby brand hobby business by a friend, sort of a friend of a friend from one of our other partners, Taylor Holiday, managing partner, actually, for 4×400.
Taylor’s friend came to him and gave him a birthday gift, and the birthday gift was this wallet that was made out of an actual old vintage baseball glove.
And it turned out this guy was making in his garage these wallets made out of old baseball gloves. And, and selling them kind of one to twosie you know, just sort of selling them off to friends and stuff like that.
Well, as this kind of thing goes, it’s a really cool idea that he’s turning old baseball gloves, which are this like, incredibly, like I said, like meaning rich mythology product to baseball people, Taylor, who is all the products, he played some professional baseball in the US like, he’s a really, really accomplished baseball player, relatively speaking, in the minor leagues, and, and just like a baseball fanatic, Taylor and I, our relationship was founded a lot of our mutual love for baseball.
So anyway, so it meant the product, we both could see it, we both could feel like, Oh, this is cool. We love this, we understand exactly what the appeal is.
The leatherworking was really cool and really good and beautiful. And so this product was great. And the founder, whose name is John, thought, was shutting it down.
It was becoming he was getting more interest than he could really deal with by doing this himself making these wallets in his garage, but not enough to be a real business.
So he was just like, Okay, I’m done with this, like, I just not gonna keep doing it. And, he was shutting it down. And so that then created the conversation was like, Hey, don’t shut it down.
Instead of doing that, why don’t you let us see if we can scale it, turn it into something, actually go find somebody to do this work at some more scale, a supply manufacturer can do this and see if we can do that.
And that launched the journey that was in the middle of 2018.
So you kind of stumbled on this product. Really? It sounds like by merely receiving this gift, like had you not receive this gift. You wouldn’t have known it existed and you wouldn’t have known that he was going to shut it down is like….
Yeah, no, totally. That’s totally right. Absolutely. It just kind of fell into our lap in that respect.
How FC Goods’ First Product Made Them See Success on It
Yeah. Interesting. Okay. So what about the product? ticked a lot of boxes for you that you thought you can see a trajectory with this?
Yeah, I think there are a couple of things. One of them was like I said, we are baseball people. So we like understood exactly the appeal and this product.
You are the target customer really.
Yeah. I mean, the wallets were expensive. So like, I personally am too cheap to have bought one.
But if somebody would gift me a new one, I would absolutely love that.
Like so, I just completely understood the appeal. And that ended up being important throughout the journey of that brand.
What we actually did was, that was one thing, but the other thing was, it was cheap. And so we’re still in proof of concept phase, the business barely existed. So we could acquire it, we paid $5,000, which was basically paying for a logo and a concept.
In 2018, we paid five grand for the business. And so it was like, okay, we can play with this and test out this next idea. Now, we had to go buy inventory and stuff after that, of course, and do a bunch of work on it, which costs all those things cost money but in terms of the actual price of the acquisition, we bought 80% of it for five grand so those two things were like okay, if we can make any business work as a bunch of digital marketers who are baseball-obsessed crazy people who like totally understand this product like it this is probably the one and so we took a shot.
There were some other things that we liked and this is definitely an element that became important to us which was landed margin because it was definitely an element here that that we we probably the one of the biggest learnings from for us from opening day was that we just did not we did not focus enough on creating high gross margin products.
But man in e-commerce It is such a difference-maker like it’s just you know what you get by going direct to consumer and what you get back in the margin by not having a store in some ways you have to give right back because if to pay for traffic like you just do and so you’re going to pay advertising dollar for traffic or and so that’s going to eat into your margin.
And so what’s so crucial is that you can get the product to the customer at a reasonable number, and what we realized was that we could set a price for this product and, and given the price of leather, and even for good quality leatherwork and stuff, like we could maintain pretty good margins there.
And there are two elements : there’s the actual product, the gross margin on the product itself. But then there’s also the cost of delivery, which is another really important thing, we use the phrase value to weight ratio a lot, which is just to say, like the average order value, relative to the weight of the product.
A product that doesn’t cost very much money to buy, but it’s very heavy, is bad, valuate ratio, right, because you’re gonna have to pay into shipping heavy products, which have this problem with another one of the brands that we acquired early on. And, and before we kind of really learned that lesson, where the product is not particularly expensive, but it’s heavy. And so it creates all kinds of gross margin challenges that we’ve fought with for the years that we’ve found it.
So the opposite is a small wallet and a small box, then it’s the leatherworking and the leather and the baseball gloves, all those things are not insanely cheap or anything, but we were able to get the landed margin to around 65 to 70 points, depending on the offer, we were running. And that ended up being strong, not incredible margins, but strong.
It’s interesting that you mentioned this, you know, the value of the weight ratio like it’s I think that’s particularly true in a country like the United States whereas an outsider, I look at the Americans and Americans are not they will not pay for shipping.
I think Amazon Prime has commissioned or has conditioned people to not pay for shipping. And I remember I once ran an experiment where I was running ads for free plus shipping. Right?
Versus cost product with free shipping. Same out-of-pocket money. So it was like, you know, there’s a cost of $10 but they would not pay for shipping. I’m not paying $5 for ship or $10 for shipping, yeah get but the products free doesn’t matter. They will pay $10 for the product with free shipping versus free product, but $10 shipping, no way they’re not paying for shipping, you know?
This does not surprise me, what you’re saying is a huge deal. I mean, just shipping, negotiating shipping costs and shipping timelines, and keeping people happy with that sort of thing is a massive factor that we continue to, we’re at 4×400, we are working very hard right now on continuing to make that a real efficiency of ours.
When we started the holding company for us like what we thought was we can build this tactical marketing powerhouse.
That was where all of the experience was, I think we’re really, really good. Really, really good there.
But we’re increasingly trying to say like we could actually create. Also, as our brand portfolio grows, as we ship more products and those kinds of things, could we actually also create some more efficiency around making this a real area of strength for us where we can get products to customers? Fast and pretty. And cheap, essentially.
So yeah. But as it goes in the early stages it was great because you could take it to a 3PL, third produce company, right?
Ship it through somebody, and it didn’t take up tons of shelf space, because I guess it’s a wallet. And they could ship it to people pretty cheap.
We could… it’s an expensive premium product, the price range there that you know, the average order value for that product, like around 140 bucks, I think, depending on seasonality and stuff, yeah.
So somebody’s buying a $140 wallet like you’re gonna try and give them some white-glove experience, really make sure that it gets there pretty fast and a really good premium gifting experience, all that kind of stuff.
So we put some time and money into the packaging and all that kind of stuff too. So, but at the end of the day, not expensive to ship so you could do some of that.
Is The $140 Price in FC Goods’ Wallet a Sweet Spot
I’m curious if you think that $140 price, the average order value is kind of the sweet spot, enabling you then to really spend a decent amount of money on acquiring traffic, or was that just a the by?
Yeah, I have a difficult relationship with sweet spots and benchmarks like this.
One of the most common questions I get, I think is like, Is this good? Or what is good? when talking about AOV or CPC or any kind of any of these metrics that people use. There’s probably a limit on the edges here.
Like at some point, it’s tough to do to utilize a tool like Facebook ads or other or other programmatic advertising tools. It’s hard to use those with products are too expensive because it takes so long to get conversion data that it’s really it’s just it’s so expensive to test anything….
And can’t optimize for the conversion early…
Exactly, yeah, statistical significance takes forever to get to right?
And on the low end, if your price is too low, it’s just challenging because traffic gets expensive CPM’s have gone up, everybody knows over the last bunch of years, but like you just told me, right, you just ran an offer a free plus shipping and at least that in some world that was viable in some way, right? That’s about as AOV as you can get.
And if you can do it, right, it’s viable. So the AOV is less of a concern for me.
The metric I think I prefer is RPC revenue per click, which is because AOV also has a trade-off with your conversion rate, right?
Like, as AOV goes up, typically, the conversion rate goes down, everybody kind of understands this intuitively, it’s you’re going to convert less customers on $1,000 product than you are on a $10 product.
Again, that’s the magic of the free plus shipping kind of idea is you’re going to convert incredible percentages of your traffic.
Theoretically, unless you’re in America like you said.
Unless you’re in America, they don’t want to pay $10 for shipping (laughs)
Yeah. But um, so if you get more AOV, you often the cost of the AOV is the conversion rate. And the opposite is true to his conversion goes up, he goes down. So a few times the conversion rates is revenue per click.
And if you just roll those up together, right? Now, you know, like, what is the actual value of a click to you and that’s the metric that I think is more helpful because at a high RPC, then you’re likely to be able to generate traffic.
And there’s actually just literalism recording my podcast. Just detailing every possible bit of context I could come up with on the metric RPC, I came up with 17 different ways you could affect RPC, there’s probably way more but everything from traffic source to demographics to what your offer is to how your landing page is designed, right?
There are a million things cross-sells upsells price product-market fit. device. a huge factor. Yeah. So all those things are factors in that.
And so the game is to me constantly that out. Now, all that said FC goods at a high AOV converted a relatively high amount of traffic, I think our RPC sat around 250 to three cents, which is, pretty good.
So I don’t know that’s spectacular, but from the metrics that I’ve seen for a young business that didn’t, that was buying lots of its traffic fresh. Yeah, I think it was pretty good.
So you’re relying on organic traffic. And I’m curious…..
Now the one thing I’ll say there really fast to put a button on that earlier conversation is, at $150,AOV the shipping price doesn’t change. So that is the nice thing there is like, if you pay if you do have to charge five bucks for shipping, and actually, we most the vast majority of our orders, we ship freight because of the price point stuff, but if you do have to charge a little bit, or if you have to pay a little bit for shipping, rather, excuse me, I charge though if you’ve to pay for shipping, it’s not really killing your margins, it’s a couple of percentage points, and it’s not the end of the day, not the end of the world.
Andrew’s Traffic Generating Strategies for FC Goods
Yeah. So I’m curious for you to expand on the type of ad campaigns that you launch straightaway, I would imagine, you know, you’ve acquired this brand, that obviously wasn’t getting much traffic, it was gonna be retired or, or just sort of the business was gonna be closing.
So you’ve got to, I kind of used the analogy, in sort of my, you know, training material that like getting a brand off the ground or hitting anything off the ground is kind of like getting a kite off the ground, you know, like trying to get the initial bit of wheeling under the wings.
But you know, it’s very different experience, if your kite’s are already in the air, and someone hands you the strings, and you can hand it to an eight year old kid, and they can continue flying the kite, you know. And I kind of view websites with no traffic to websites with existing traffic and momentum and data as kind of that same analogy.
So it’s hard to get something off the ground, brand new.
So I’m curious, what type of ad campaign and this is probably a good and appropriate question for you as somebody who’s head of strategy, what was your strategy going into really sort of get the initial air under the wings of this kite?
Yeah, there’s no question. That’s what we have to be able to do for 4×400 is we’re going to live and die on our ability to acquire customers profitably at scale because we’re buying these very small businesses.
So with our background, being heavily Facebook ads intensive, we feel really comfortable there. And, and that being sort of the key thing, I think your analogy is great. I’m going to totally steal that. I’ll try to credit you as often as I can remember. (laughs)
It’s gone now. (laughs)
Yeah, no, that analogy is great. I mean, that is totally The battle is establishing sort of some of that basic fit and basic wind.
And so I think a couple of things here.
So what we did was we started around Father’s Day, in the US and we did this really like tug at the heart as we had this idea around sort of fathers and sons and baseball.
And that’s like, yeah, very, very baseball kind of thing. You know, sort of dark sunset moody B-roll of kids on a field hitting baseballs and stuff like that.
Not actually I’m in some ways a little more story-driven, then a lot of that a lot of Facebook ads really move towards now actually kind of wonder, in retrospect, that would have played better on YouTube.
YouTube’s ad product wasn’t quite there at the time.
But yeah, so that was the initial idea that worked, okay.
And what we didn’t know was just how insanely seasonal the business was going to be. Over time, what we learned was like 80 plus percent of our traffic, we’re buying gifts. So it is a heavily gift brand, a gift product.
And so we tested early, and we saw some fit there, like pretty much right when the turnouts on. But then, over the next five months, it really took us some time to be spending less than 60% of our ad, or 60% of our revenue back into ad dollars, like we were, you know, and that’s not because you can’t build a sustainable business that way.
I mean, I guess you sort of go if your margins aren’t good enough, but it’s not the kind of business we’re trying to build. So in the early days, they were willing to spend a lot of money fast to try to figure out what’s gonna work and what’s not test, test, test, test test.
And, and so without about the sixth month, we started to see some success. And then over time, from there, we were able to iterate to the total journey, that’s the gods was basically a $0 revenue company when we got it like, you know, effectively, and we sold it we had done was right, it was gonna be right up against 3 million last year in revenue.
So it, you know, I think you were very nice to say it was very large, I think that might be a little overstated, but, but it was a good-sized company when we sold it from zero, and we were really excited about it.
So, the difference from zero to 3,000,00, 1st of all I don’t want to make that sound like we did that in a couple of years. And that’s great. But like, there was about five months of like tests, try to figure it out, see what works, try to figure it out, see what works, learn, learn, learn, and it did not like, go it didn’t the kite didn’t just go up right away. Right, there was a lot of running around on the ground first.
The analogy really taking life now, isn’t it? (laughs)
Yeah, it’s helpful. I’m telling you, it’s good.
Here’s what I’ll say that the real mock for us was though, the ad that one the biggest for us was an ad where we very simply had a guy, a team member of ours, it’s showing the product up close in a garage, kind of a moody setting.
You know, we set it a little bit for sure, but it looks like kind of a leather workroom.
Yeah, something like that, you know, dark wood, all that kind of stuff. And, and he is holding the wallet up and saying this is the classic card case for messy goods. And you got a good beautiful shot. This is ridiculous.
But this is a phrase it was used: interspersed with lots of sexy wallet video. Well, I mean, it’s like these walls show Well, they look great on camera because you can see it’s an old baseball club. So it’s beautiful.
And, and, and the craftsmanship. Our manufacturer is so good. They’re down in the Dominican Republic, one of the baseball capitals of the world. So there’s a little bit of story there as well.
And, and man these walls come up beautiful. These guys are really skilled and so they show up close on a video or up close on the product.
And then he just explained it. Here are the baseball glove leather and the rest of its full-grain steer hide.
And here’s what you know if you want to return it, you can customize it like this, and it’s just that simple guy talking to a camera showing the product.
And what that reinforces to me is that like job number one in digital advertising job number one, at every step-outs all of our biggest wins for us the goods were about clarity. Just like asking yourself the question, how do you make it clearer because the customer can’t like FC goods would sell itself in a store.
Like we’d probably if we were better wholesale people, we probably could have built a good-sized business doing wholesale goods because you could pick it up, pick your exact wallet, everyone’s different because they’re all from your baseball gloves, right?
You could pick it up, look at it, feel it, touch it, turn around, see the leathercrafting all that kind of stuff, see the packaging, but you can’t do that on a website.
And so for us, we have to simulate that process as best as we possibly could. And so that’s I think what that video really did is it just showed very, very clearly here is what you’re getting so that maybe it’s not the cheapest click in the history of the world.
Maybe it’s not the most riveting ad is for the world but anybody who looked at it and saw it and stayed for the five seconds long enough to see the wallet, knew exactly what it was and it was beautiful and the PDP support The product page you know, supported all of that landing page support all that showed it to you up close, here’s what it looks like with cards in it and with money and, and all that kind of stuff.
And that worked. And I like, I’ll go to my grave with that, right. So the number one thing to do in e-commerce digital advertising is be clearer. And it’s actually it’s, it’s actually a hard skill to develop, to communicate clearly. But that’s, that’s what I think job number one.
Yeah, I love that. And it sounds, it sounds like it’s almost like an unboxing type video, just totally simulating that experience for people close to the real experiences as it possibly can be.
So did you write a story copy above that video ad as well, or you just have very small amounts of text?
We just captioned it. I mean, again, it kind of breaks the rules of Facebook ads, right? Because like the rule of thumb is that 80% of, you know, Facebook, Instagram videos washed-out sound.
So you know, do the Mashable style thing where you cannot have the text on screen and all that stuff. And don’t do VO but it worked for us. So I don’t know, I don’t know what to make of that. It did work. So yeah.
maybe it’s a combination of, you know, really good targeting. So you knew your ad was going in front of exactly the right person. And it possibly created some intrigue for that right person that they were willing to turn the sound on?
Yeah, I think in the early stages, that’s probably true. I’ll tell you I know from it, I believe and I don’t I forgive me if this goes against something that you teach, and if it does, like I totally could.
Yeah, but just Facebook’s algorithm in today’s world is so dang good that like, we, we target pretty broadly pretty much all the time.
I mean, and certainly when I was learning, it was like 1% look alike, everything. Tight weeks, exclude everything, like the whole deal. But now it’s like we run pretty broad targeting just a few exclusions, make sure to get past customers out of there.
And then expand the interests and expand the reach and let Facebook go find more people like it because Facebook, obviously I mean, very simply knows way more about the customer than I do. So.
Yeah. But that’s, you know, touching back on what we were talking about before of getting enough conversion data through your pixel with exactly who you want, you know, and there’s that balance of like, you have spent enough money to get enough conversion data through that pixel that you can then use that wider audiences and let Facebook do their thing.
And sort of that’s, that’s the challenge for so many advertisers I find is getting to that point, is really difficult because it does require, A: a product that people really want and are willing to buy from a Facebook ad at some point, and B: enough budget to justify and average order value and all that kind of stuff.
Yeah, that’s totally true.
His Feedback in Using YouTube Ads
I’m curious if you use that for converting video in on YouTube, for example, or any other places?
We didn’t really like, we’re not good on YouTube.
And we also at the time, didn’t have a lot of extra dollars to throw around and test with the outside of stuff that was a little more exploratory.
As we continue to grow, I’m hoping that we can, that we can do that more.
But we’ve certainly done some like but we just haven’t made a major acquisition channel for us.
So Facebook Ads is your major acquisition channel? Did you…
Yeah and that’s not that’s not because I think it’s necessarily best, I think, I mean, it probably is for most e-commerce people.
But, um, but it’s just because we’re, we’re best and actually no, it’s not a thing. I strongly believe right now. It’s just like, there’s a million ways to make money in e-commerce, if you’re good at them.
Like I know, people are making real money with affiliates, and with this insane automation and email flow, I mean, and you know, we do all of that stuff to some degree.
You know, our automation is good, our retention marketing is good, like all that stuff. I know there are people who are just insane with every possible channel, there are great YouTube advertisers, and incredible Amazon people, and all that.
But what I believe right now is that like, there’s, there’s a constant allure to going and finding the next revenue channel.
As people often salespeople are out there telling you to go to this, look at all the money I’m making over here. And what I think right now is like the key really is to not so much the channel but the people.
Like if you can find absolute killers, who are just like really, really good on a certain channel, then you should probably give them your money and let them optimize that channel for you or, you know, at an agency level or hire them or whatever.
So that’s kind of what I’m waiting for, for YouTube is like I have I’m kind of chasing that down.
Right now with like, Who’s the great YouTube person that I know who really I can go like, you tell me what to do. And I’ll do it.
Because I’m sure if I spent the time I could figure it out and everything, but I don’t wanna spend the time I like to do. And we’re doing all right on other channels. So, yeah.
Other Ways of Acquiring Sales for FC Goods
Fair enough. So I’m, I’m curious, though, if you just relied solely on your Facebook ads to really scale this. The sales for this ecommerce brand?
Yeah, not solely. So customer acquisition. Certainly. That was our main way of doing it, we did spend a decent amount of money on categorical search, there are a couple of other baseball glove wallet brands out there.
So we had some dollars going towards the decent amount of money over time going towards categorical search on what I would call sort of like mid funnel terms.
So like low mid funnel, so like terms like baseball glove wallet, like, like there is some search volume around that. And I don’t know if we created that with our ads mostly or or not.
But we, you know, we were definitely bidding on those terms that that traffic is obviously incredibly high class traffic for us. Like if you’re searching for a baseball glove wallet, and you find our site, we do a really good job like so.
Yeah, so we scooped up as much as we could with some cool shopping like PLA’s on that.
Yeah. And then we definitely ran some display as well. I’m like the last guy standing. I don’t know what your world is like. But I’m fully a believer that there’s a way to make display ads work in the world, but they’re not dead and all that.
Totally. I love to split.
Yeah. Okay, great. That’s awesome. Because I also have people around here mock me for my love of display. I feel like nobody clicks on those.
Well, that’s why their price is so cheap. So um, yeah. So yeah, so. So we definitely had some success there as well. But all of that was supplemental.
And then the other thing is, like, we really built out some product releases, and some an email program and some of that stuff that became, you know, significant parts of the revenue over time, as well.
And just tried to make it a great experience. It’s about I’ll tell you, the reason we sold it was because we could never really solve the second product for people to buy.
So once people bought one wallet from us, they, there’s no reason to buy a second one, you know, so our, our customer LTV was low.
And what we got for sure got some word of mouth from people who were buying from us, it wasn’t enough to make it so that a customer is worth a lot to us after the first purchase.
And that really, at some point, you’re going to hit a cap on your growth.
And if maybe if I was awesome on YouTube or something, I could have unlocked another couple million bucks in revenue, but I’m not and neither was anybody on my team. That’s not a shot at anybody. That’s just not where we spend our time.
So a lot of what we sold was we thought, let’s get to somebody else who can take it to the next stage from where we’ve gotten it to. And we’ll take the cash and invest it in other brands that we’re working on. Because, you know, that’s the kind of luxury of having multiple brands.
FC Goods’ Turning Point in Terms of Growth and Scale
Yeah, amazing. Lastly, on the success of this FC goods, what would you say was the biggest turning point for you to really growing and scaling it? I guess, traffic-wise as well?
Yeah, yeah. I think probably the answer to that question was two things. One of them was getting those ads that were just this talking head kind of video that I mean, we shot that one day, actually, we didn’t even shoot it as an ad we shot it to put it on our PDP, we thought, Oh, this will help people understand the product.
And I was like, well, we have the content, why not throw it in an ad? See if it works, you know, might as well test that, and then it’s like this, I mean, it just took off.
And actually another thing there was like, when we started it and we just had to talk head it did not work but when we added an intro card that said just had a little like, you know, it said like vintage baseball gloves handcrafted wallets. And that’s all it’s that just like straight here’s what it is straightforward. It’s just kind of an intriguing thing. If you like baseball, like “What baseball glove wallets?”.
And then it went from there a couple of seconds of that into his name is Corey Corey talking. Showing the product and that really made a huge difference.
So yeah, so that was a lot of that thing that really unlocked the rest is finding that ad and we found we got a lot of scale-out of that. I think that ad is probably still running for FC Goods. And it’s still, I mean, we tried every which way we could to beat that ad. Yeah, it didn’t work. Um, another thing actually….
I just want to add something on my experience, like you find a winning ad that works really well for whatever reason, and often sounds like, you know, you’ve experienced it I’ve had before where, you know, you could never have predicted the success that that ad would have, you know, but if you have to test everything and for whatever reason, it works.
And what I find is that once you find something that works, it works incredibly quickly. So this whole ad age that you need to get. Give it like a month before you can tell if it’s really working or not, like, you know, instantly if it’s working equally important, you know, instantly something is not working.
So it’s I think that’s so true. Like, I think the learning phase on Facebook is real. And, and, and, and you do decrease volatility over time as you as the algorithm walks in and out stuff, but I think you’re completely right about that.
Like, it’s really rare that I’ve seen an ad like, like, quote, unquote, build up data, and then suddenly change how much it performs like, it just doesn’t work that way.
I know. And I just find, I don’t know, so many agencies say that to people, we got it really, like very, you know, very mind likes, you know, maybe Google search campaigns in a while to sort of, you know, hone the negative keywords and all that kind of stuff.
But if you’re sending enough data through it, let’s say your Facebook ads, a winning creative, it is like, you sort of wake up one morning and go what has happened with his ad because something is just completely taken off. And it works really, really quickly.
I think that’s Yeah, I think that’s just totally right. Yeah. If somebody says they need time and money to test lots of different ads, then I think yes, yeah. But yeah sitting on one ad and waiting for the turnarounds Not gonna happen, unless you’re changing landers like crazy or something like that.
Or changing your targeting completely, or something like that. And it also sort of brings to mind as well, the importance to really test everything.
And I tell my students and clients all the time that like, I’ve been proven wrong so many times that I’ve remained humble, you know, I mean, like, things that I think will kill it don’t and things that I think we’ll do, we’ll do or don’t do, well, do you know that we just have to test everything, you don’t have to test it for long.
Because it’s, you know, you know, pretty quickly. But, you know, if I’m not the target audience like this, we’re just gonna test it and let the data talk, you know?
No, look, there’s nothing in the world more bankable in digital advertising than that, then if I strongly believe an ad, or a landing page concept is going to work, that it will not work.
Like I have a pretty good amount of experience at this point. And I am so wrong all the time. But the beauty of data is that the data is the great humbler of everybody?
It’s like, the great it’s, it’s Yeah, totally. And it’s so I actually love this about the world. Like, it’s just it does level the playing field and, and people you like, it’s the hardest thing for ad buyers, sometimes to get in their heads and for creatives to get their heads is telling somebody who’s running creative.
Like the ad, content is just sitting there. Just try it. Yes. Try it. Even if you don’t think it will work. I don’t care. You know why?
Because you are often wrong. And so…my…man is but it’s, it’s so true. Like, yeah, it’s one of the best pieces of advice I can give somebody just try more stuff as fast as you can try more stuff.
Yeah, try more stuff. But once you find if it’s not working, kill it quickly.
Really quickly. Yeah, that’s right.
Yeah, you were going to touch on another takeaway, or if I completely blown that thought out of the water, we have a segue, which I might….
What else was I gonna say about turning was about turning points. And since I’ll say nothing on that out of clarity.
Another thing that we did was, we added an image to our PDP star product pages. First, we just put it right below the buy box, basically. And it was an image of the wallet where it had little lines, going to the two pieces of the wallet.
And one line said vintage baseball glove leather. And then the other line kind of called out to full grain us steerhide. So all it was doing was showing the construction of the wallet, so that when you saw the image, you could see exactly, here’s the part of the wall, it’s baseball glove leather, here’s the part of the wall that’s just like the regular letter because the walls were a mix, for a number of reasons.
So anyway, when we first added that image to the product page, we saw an immediate and significant conversion rate bump. And you’ll forgive me. I don’t remember the percentage, but it made a big difference right away.
Suddenly, people who landed on that page bought a lot more often. And what I believe is that it was like one of the ultimate moments and clarity as a winner.
It just, it just made it so that people knew exactly what they were buying the moment that they saw the image and it communicated quickly. It communicated easily.
And it was a really crucial moment to later on, return that into a video in those videos that people showing and explaining it what we did is we just made the thumbnail on the video, that same image so that even if you didn’t click play, you still got the same effect.
And could see that so that was another thing. It was huge. So it’s just another moment of like, whether it’s landing page, the PDP homepage like add anything, be clear.
It sounds like it’s also a process of bit of detective work as well. You know, like…
It’s so true.
Like this work. Okay, how can we apply this to something else? Because if this means that it should apply to something else as well.
I think that’s Yeah, I’m gonna steal that analogy too…
Learnings from Other Brands
When we started, I said, you know, we could touch on some of your learnings as well from brands that possibly haven’t gone nearly as well, as you obviously touched on already the cost of shipping.
So a low-cost item with a high cost of shipping sounds like a recipe for disaster. Yeah. What are some of the other learnings that you’ve heard from brands that possibly haven’t gone according to plan, which is pretty standard in this way?
Yeah. So, I think maybe the easiest way to summarize and speak to the four things that I look for now when I acquire a brand.
Because I’ve kind of, I’ve kind of limited that down the first one, and everything else is secondary to this now, to me, is landed margin, which we touched on already, but one, and then a line underneath it before you get to any of the other factors is land margin, the reality is high margin makes everything easier, it just makes everything easier. You don’t have to be as good on your ads, you can acquire more traffic faster if there’s more margin to give.
The thing is to margin is not something that you’re stuck with, it’s not fixed. Like there’s, there’s a lot of ways in which I mean, there’s a limit to how much margin you can get at any given time. But if your margin is bad, try changing it. And what I mean by that is like, see, like, there’s a million things you do shop 3PL’s to see if you can get fulfillment cost down. See if you can ship it yourself. Maybe it’s cheaper, like that can be a whole thing to do. Change your price, change your price, like, try and play with that shop manufacturer to see if there’s different ways to take features out of the product that customers don’t actually care about.
Anyway, there’s just a minute like trying to bundle products. If you can raise your AOV then it can, you know, products get a lot cheaper to ship, when you add stuff to them, right, the first pick is the most expensive pick.
So if you can get two items into an order instead of one, as a percentage, your fulfillment costs go way down and your shipping costs go way down. So there’s like a million things like that, that you can try to think of to do and, and so knowing that can be really good. And so for us we look….
Would you say a good landed margin is a percentage?
Well, so there you ask my question again, which is like a benchmark kind of question. I’m looking for 70 plus.
I want pretty good margins. Yeah. And, and I’m feeling really good at 80. I’ve seen you know, 90. And that’s where this is why everybody has this skincare company right now including us, just because skincare margins are out of this world.
For a supplements company.
Supplements and skincare yeah, that’s right. Yeah.
So um, so yeah, so that’s, uh, that’s number one for me above everything else. And there’s always elements of it.
One other little thing on margin. One advantage to having shipping, taking up more of your margin, than the actual product is that you typically are paying for shipping after you’ve received the money.
So on a cash conversion basis, like on a finance basis, it’s much easier.
So one thing people don’t realize about margin too is that if you have a higher margin if your margin is disproportionately on the product, you’re going to have to pay for the product, even if you have terms with your manufacturer upfront, and then sell the product.
So from a cash perspective, you’re going to tie up working capital in your inventory.
Whereas if you’re paying typically shipping, you’re not paying the shipping until you’ve received cash from the customer. And it works a lot better in terms of your cash conversion cycle.
So this is another advantage like sometimes skincare where, where the margin on a product is really, really strong.
And then maybe if you’re shipping moderately heavy bottles of things around and jars of things, that you’re actually not paying the shipping until after you’ve received cash. And so it works really well for your cash conversion cycle.
So because otherwise cash is tied up in inventory, so there’s another little lesson from that.
Okay, so three other things that I look for in a brand number two RPC.
If I see a brand that has a high RPC, I’m excited about it. And if you…
Revenue Per Click, yes?
Yes, yeah, that’s right. Yeah. That’s a good one and then LTV. People have a hard time.
Life Time Value?
Yes. Sorry. Thanks. I know we live in a world of acronyms. And I’m sometimes bad at explaining this.
For our listeners (chuckles)
Yeah, all right, a high lifetime value. Because what you realize is high Life Time Value particularly. Well, we look at not just LTV, generally, but like on a 60 day window.
So what we want to see is like, what’s the 60 day LTV because if I have a great LTV, but it takes me a year to recuperate it, like then I have to float a bunch of cash to make up for that whole year.
So you pretty much converted here. So many people say that I get over a three year period. What’s a customer worth years, like No. You’ve ever tried to run a business with cash flow? You can’t budget for that traffic-wise, are you going to take three years to recoup it.
Yeah, the example I’ve heard is that at some point, I heard the staff at Starbucks was willing to pay $500 to acquire a customer. And that’s because the LTV of Starbucks customer and certainly my LTV as a Starbucks customer is well worth more than that.
But the difference between you and Starbucks or me and Starbucks, right is the giant war chest of cash sitting somewhere that allows you to float the gap in that $500.
And so unless you have Starbucks cash, you can’t do that.
Even if you can make the money on LTV.
So LTV is another thing. So we look specifically at a 60-day window, we have a proprietary tool that got built that gives you really good visibility, that last one is if some for us, if somebody has had limited Facebook ads success, that’s a good sign for us, because we’re really good at Facebook.
So we feel like we could probably fix that. So if you get those things high RPC high LTV and high margin, we think we can even add only 100,000 in business revenue. If, for us, that’s, that’s a great brand to acquire.
So I would say, for somebody listening to this, those are the three things I’d be trying to fix. I think given time if you can get your margin into a really good spot if you can make a click worth a lot of money to you.
And if you can make a customer worth a lot of money to you, you’ve got a really good business. That’s all simple. Just nuts. Just don’t just go do that. It’s really easy.
Yeah, just go and do that multiple times with lots of different easy jobs done no problem. (laughs)
Right, of course, that of course actually solving all those is the challenge. So…
Learn More About Andrew Faris
Andrew, you’ve been so generous with your knowledge and your time? Where can people find out a little bit more information about you?
Yeah, sure. So I host a podcast called the “Ecommerce Playbook Podcast”, you can find that anywhere podcasts are sold.
And what we do on our podcast is I just try to walk people through exactly my journey we release week of recording. And I will tell you like all the way down to how much cash we have in the bank at a given time.
We try to be relentlessly honest about where we’re at which has included a lot of mistakes and a lot of wins.
And everything in between so that comes out every week Ecommerce Playbook Podcast. And probably the best place to find me is Twitter. If you’re not on Ecommerce Twitter, you should get there.
It’s a delightful community. People are so helpful and warm. And @andrewjferris
Yeah. Because of the Twitter hashtag that you follow?
Ah, I don’t think so. But there’s a couple of Twitter lists. Yeah, just tweet at me. And I’ll tell you, I’ll tell you where to go at Andrew Ferris, or maybe if I maybe I’ll send it to you for show notes here, Ilana.
And you can, there’s a good Twitter list for like 100 people, you can just follow, just like, kind of get in the conversation. It’s great Twitter, people are so generous with their time on Twitter. It’s really awesome.
If you want to see any more of what we do, and see our brands for 4×400.com and if you go to 4×400.com, you’ll see all five of our brands that are there right now and can go check out their sites and feel free to reach out to me. I’d love to love to talk.
So yeah, Twitter’s probably the best place to do that. Hit me in the DM’s.
That’s how I found you. So yes to Twitter working. Awesome. Thank you so much for coming on and sharing your knowledge. And yeah, we’ll put links in the show notes and all that.
Yeah, I really appreciate it. A lot of thanks for having me.